S T GANAPATHY MUDALIAR Vs. S G PANDURANGAN

JUDGEMENT

(1.) TWO shareholder-petitioners claiming to hold about 66 percentage of shares in Esteji Hotels Private Limited (hereinafter referred to as "the company") have filed this petition under Sections 397, 398, 400, 402, 403 and 404 of the Companies Act, 1956 (hereinafter referred to as "the Act"), alleging various acts of oppression and mismanagement in the affairs of the company.

(2.) Shri Harikrishnan, appearing for the petitioners, initiating the arguments, submitted that the company was incorporated in January, 1989, as a family company consisting of petitioner No. 1, the father ; petitioner No. 2, his second son ; and respondent No. 1, his first son, each holding 9,770, 9,600 and 9,980 shares, respectively, in the company while five other shareholders held among themselves 650 shares. This company was mainly incorporated to run a hotel to be built on a certain land in Kodaikanal, which was collectively purchased by petitioner No. 1 and his sons. All the three of them were directors of the company. Originally, the authorised capital of the company was Rs. 25 lakhs which was later increased to Rs. 30 lakhs and the shareholdings, as indicated above, emerged after such increase. The land in question was leased to the company for a period of three years and the company also availed of certain financial assistance from the Tamil Nadu Industrial Investment Corporation (TIIC). The shares of the family shareholders were pledged with TIIC. Since the company by itself could not run the hotel, the same was leased to a partnership firm in which the family shareholders were also partners. This arrangement was going on till March, 1994, after which certain disputes have arisen among the family shareholders and respondent No. 1 has unilaterally taken over the management of the company by adopting various oppressive and dishonest acts against the other two family shareholders, resulting in filing of this petition.

(3.) SHRI Harikrishnan submitted that, in view of the fact that no notice of any board meeting had been received by the petitioners-directors and that, even if a board meeting had been held, in the absence of any notice neither the first petitioner nor the second respondent attended the said alleged meeting. In the absence of their presence in the board meeting, respondents Nos. 2 and 3 could have never been appointed as directors as there would have been no quorum.